This study empirically investigates the effects of climate change on agricultural income by estimating both long-run and short-run impacts for national agricultural income and fruit crop income in Korea. While much of the existing literature has focus...
This study empirically investigates the effects of climate change on agricultural income by estimating both long-run and short-run impacts for national agricultural income and fruit crop income in Korea. While much of the existing literature has focused on analyses limited to specific regions or individual crop categories, this study aims to provide a comprehensive assessment of the structural impacts of climate change on agricultural income using national-level data and long-term time-series information covering major fruit crops.
Annual data on national agricultural income from 1973 to 2024 and fruit crop income for five major crops—apple, pear, grape, peach, and mandarin—from 1980 to 2024 are employed. Climate variables include average temperature, precipitation, heat extremes, and cold-wave indicators, while price and yield variables are incorporated as control factors. Given the mixed orders of integration among the variables, the Autoregressive Distributed Lag (ARDL) model and the associated Error Correction Model (ECM) framework are applied to jointly estimate long-run equilibrium relationships and short-run adjustment dynamics.
The results for national agricultural income indicate that average temperature and cold-wave conditions exert statistically significant long-run effects on agricultural income. The estimated error-correction term is negative and statistically significant, confirming the presence of an adjustment mechanism through which agricultural income converges toward its long-run equilibrium following short-term shocks.
The results for fruit crop income indicate that major climate variables are statistically significant in the long run for several fruit crops, reflecting the structural vulnerability of the fruit sector to climate change. And the error-correction estimates suggest relatively rapid adjustment toward long-run equilibrium.
These findings imply that agricultural climate adaptation policies should move beyond short-term disaster response and incorporate long-term income stabilization and climate adaptation strategies, particularly for fruit crops. This study analyzes the impact of climate change on aggregate incomes using nationwide annual data. While capturing overall income patterns, this approach is limited in assessing regional and temporal variations, underscoring the need for future research with more detailed, disaggregated data.